September 25, 1982
My fellow Americans:
I'd like to talk to you today about a piece of news that spells real hope for everyone. I'm talking about the economic war we're waging together and winning against enemy number one -- inflation.
Memories fade quickly. Only a short time ago we were told double-digit inflation was here to stay for the rest of this decade. At one point in 1980, inflation was zooming at an annual rate of 18 percent. I'll always remember traveling this country and seeing how many people were frightened that our way of life was slipping away from us. And indeed, between 1978 and 1980 the buying power of the average weekly paycheck declined almost 9 percent. Putting food on the table, keeping families warm and healthy, filling our cars with gas, and, for our elders, preserving the value of pensions -- all these things were getting harder and harder to do.
I remember visiting one store in Lima, Ohio, in October 1980. It was Clyde Evans' grocery. I used a survey by Ohio State University and showed how inflation was robbing families of their purchasing power. For a typical family of four, $60 had purchased a week's supply of food in 1976. By 1980 that same $60 only bought, well, at best, a few days' worth. And by 1984, if there was no improvement in inflation, elderly Americans on fixed incomes would literally have gone hungry.
That was the desperate situation we faced when our administration took over in January of 1981, and that's why we've had to make some tough, even unpopular decisions to get runaway spending under control. As I mentioned a moment ago, we're winning the war the experts said was hopeless. In these less than 2 years, inflation has been cut more than in half, down to 5.1 percent so far this year.
I know this isn't easy for people to see. You go in to buy, and the price is higher than it was the last time. But it hasn't gone up as much as it did in each of those last few years. That's why, for the first time in quite a while, real after-tax income is increasing; your paycheck buys more than it did.
Some of you are probably thinking, well, what concerns us today is jobs, and I agree. We have a bill in the Congress which will provide job training for a million unemployed people or more per year for permanent jobs in the private sector. This legislation is needed, but it's only a partial remedy.
Let's remember why unemployment has been gaining on us, averaging over 7 percent since 1976. Rising inflation pushed up interest rates in the late 1970's, and together they hit us like a one-two punch, sending shock waves through the economy. It became more difficult for families to get home mortgages, for consumers to carry auto loans, for firms to modernize their machines and keep their product prices competitive. To make matters worse, as high inflation and interest rates were crippling the economy's ability to provide jobs, they were forcing more families to seek a second income. Well, this all came home to roost in 1980, when inflation reached double digits for the second straight year and interest rates soared to 21\1/2\ percent -- their highest peak in more than a century. Again, that's the mess we inherited.
I don't believe that it follows that those who took us to the edge of economic Armageddon are automatically best qualified to lecture us now on the most fair, effective way to end the crisis. And when those same individuals charge our administration fights inflation by putting people out of work, I say they're exploiting helpless people for their own political gain. It's the most cynical form of demagoguery.
How does making people able to buy more cause some other people to lose their jobs? Creating more jobs requires getting interest rates down further and keeping them down, and that can only come from continued progress against inflation. We've beaten down those 21\1/2\-percent interest rates to 13\1/2\. And we can -- and must -- do better. But if the public senses we're giving up the fight against inflation, those who lend money will demand higher interest rates, and we'll be right back in the soup with even higher unemployment.
There's only one major cause of our economic problems: government spending more than it takes in and sending you the bill. There's only one permanent cure: bringing government spending in line with government revenues. We have not had 21 red-ink budgets in 22 years because you the people are not taxed enough. The Government has run more than $1 trillion into debt because too many politicians spent too much of your money for too long.
Many liberals have made it clear they want to take back the third year of your tax cut and the indexing. This will only give government more money to spend, weaken savings, and hurt those who need help most -- lower- and middle-income taxpayers, the backbone of this country. Well, we're not going to let them do it. We need less spending.
So far, I have not received for my signature one appropriations bill for the fiscal year that begins this coming Friday. The leadership in the House is also sitting on an historic measure already approved by the Senate and supported by 80 percent of the public -- a constitutional amendment requiring balanced budgets. This amendment offers us our best chance of getting control of runaway spending.
It's tragic at this late date that those who controlled the Congress for so long and spent us to the brink of bankruptcy are still playing politics with these problems and the suffering they caused. Believe me, it's time they realized that much more than an off-year election is at stake.
Till next week, thanks for listening, and God bless you.
Note: The President spoke at 12:06 p.m. from the Oval Office at the White House.